Boiling it all down, here’s what was accomplished at the G20:
- The IMF gets $1.1 trillion, which basically means they get the G20’s permission to make additional loans to poor nations. Much of that debt will be shouldered by the U.S. China reportedly will chip in a paltry $0.04 trillion.
- Some additional oversight of hedge funds.
- Some additional pressure on tax shelter nations like Switzerland to end their secrecy. (This was Switzerland’s punishment for not joining the EU.)
- A pledge to avoid protectionism.
That’s it. Obama’s goal was to get other nations to spend more on domestic stimulus plans, hoping to improve the global trade imbalance by getting other nations to boost their domestic economies and rely less on exports. He got steam-rolled. Not a penny’s worth of stimulus. Export nations are perfectly happy with their host-parasite relationship with the U.S.
The real purpose of the IMF money, in addition to assuaging their consciences about the plight of the biggest losers in globalization, was to further boost exports – a boon for the economies of China, Japan, Germany and South Korea – funded by another layer of debt on top of the mountain of debt that has crushed the global economy. More help for the exporters, funded by American taxpayers.
This was Obama’s big chance to show some backbone, chastise these nations for their over-reliance on exports, and to serve notice that America cannot and will not sustain a trade deficit any longer. He opted instead for harmony and all-smiles photo ops. As it says in the book of Ecclesiastes, there is a time for every purpose under heaven. This was the time to begin addressing the conditions that have created enormous imbalances in the global economy. Instead, President Obama allowed the G20 to focus on restoring the global host-parasite status quo.